The downward trend of home prices reversed in May, says the Teranet–National Bank House Price Index, released today.
After six months of decreases—partly the result of rising interest rates and policy measures—the index increased 0.5% last month.
Prices rose in nine of 11 markets, including Hamilton (+2.2%), Ottawa-Gatineau (+1.7%) and Halifax (+0.9). The two markets where the index fell were Vancouver (–0.2%) and Edmonton (–0.3%).
However, the report warned against a too-optimistic view of the index’s first gain in seven months: the increase represents the weakest performance on record for a month of May. May is historically the second strongest month of the year, the report said.
Further, the index’s annual increase moderated to 0.7%, the lowest since the Great Recession 10 years ago.
Still, despite policy measures intended to cool Canada’s previously too-hot housing market—the mortgage stress test for uninsured mortgages, the introduction of a foreign buyers tax in parts of Ontario and B.C., and earlier increases in mortgage rates—the market is stabilizing.
For example, home sales have increased for the third consecutive month, rebounding close the their 10-year average, “a development made possible thanks to a booming labour market and a plunge in mortgage rates,” the report said.
In Toronto, prices for condos and other dwellings pulled back in May, but resale market conditions don’t suggest “significant deterioration” in coming months, the report said, especially when the Greater Toronto Area has created 92,000 jobs so far this year. The index rose 0.7% in Toronto in May and 2.6% annualized.
While Vancouver’s market had the index’s second-weakest monthly performance and weakest annual performance (–4.1%), its job market is also strong this year and potentially contributed to a strong rebound in resales in May of 24%.
For details on all 11 markets, see the index.